A Critical Analysis of the DOJ’s New Policy on Corporate Criminal Enforcement

ABSTRACT:

The Department of Justice has once again issued a rewrite of its policy memo on corporate criminal enforcement and settlement. For the last twenty years it has become a right of passage for every new Deputy Attorney General to provide their own tweaks to the prior Deputy AG’s memo on corporate settlements.

And just as the seasons regularly follow each other, these tweaks are inevitably followed by law firm legal memos that read the tea leaves in the latest memo to provide an update for corporate clients. This essay is partly such a tea leaf reading exercise, but it also partly offers a critical analysis of some unfair expectations contained in the new guidelines.

When considering when and how to charge the collective associations, interests and contracts that corporations represent, a host of policy questions always arise. These questions have been at the heart of debates over corporate criminal investigations since the dawn of DOJ’s focus in this era just after the Watergate hearings exposed bribery and fraud in US public companies.

Questions like: How can the DOJ be so certain in its assertion in the new memo that corporate prosecutions are more rare lately because of insufficient resources for the Department, versus because companies are doing a better job of self-policing? How pervasive does criminal activity within a company need to be, and how high up does it need to go, before it is appropriate to hold the company liable rather than a group of individuals? How can prosecutors ensure they do not destroy the share value of innocent, and perhaps wronged, shareholders when taking action against the company, since shareholders ultimately pay the cost of investigations and prosecutorial actions against the company?

And as the laundry list of items required to obtain credit in corporate criminal settlement negotiations increases with every revision of the memo, in the shadow of the DOJ’s indictment power that can decimate a public company before adjudication, the DOJ’s extrajudicial exercise of power in these memos is never subject to judicial review for constitutionality.